Independent Equity Research Corp., 130 Adelaide Street W., Suite 2215, Toronto, Ontario, Canada M5H 3P5 www.eresearch.ca

Update Report July 3, 2008

VICTHOM HUMAN BIONICS INC.($0.125, VHB: TSX)

Data Source: www.BigCharts.com

RecommendationSpeculative Buy (No Change)

RiskHigh

Price (July 2)$0.125

52-Week Range$0.30-$0.085

Target Price1-Year: $0.40 (Raised)4-Year: $1.50 (New)

Potential Return1-Year: 3.20x4-Year: 12.00x

Shares O/S95.89 million

Market Cap$12 million

Average Daily Volume 20-day: 191,800 150-day: 117,900

Year-End December 31

C$ REV EPS2007A $2.27 ($0.12)2008E $3.00 ($0.10)2009E $2.80 ($0.09)2010E $12.88 ($0.04)2011E $35.84 $0.08

REV: Revenue (millions)EPS: Earnings Per Share

AnalystsAsim Bukhtiar, MBA, CFABob Weir, B.Sc., B.Comm., CFA

UPFRONT Plans to commercialize the Neurostep in 2009 mean that a partnership agreement may be on the horizon. The POWER KNEE 2 is attracting greater market attention and expanding addressable market size. The next 12 months should be interesting.

RECOMMENDATIONWe have increased our one-year Target Price to $0.40 per share from $0.30, with our valuation based on discounted cash flow and sales multiple analyses. We are introducing our four-year target price of $1.50 based on 4.5x expected 2012 sales. We continue to rate the shares as a Speculative Buy, suitable for risk-tolerant investors willing to take a longer-term view.

PROFILE Victhom Human Bionics Inc. (“Victhom” or the “Company”) specializes in the development of artificial intelligence-based prosthetics and fully implantable neurostimulation devices for the treatment of stroke-related physical dysfunctions.

HIGHLIGHTS• $5 billion addressable market for the Neurostep which could potentially become the

market leader. • Positive initial results for the Neurostep. Public release of trial results expected by the

end of 2008.• Neurostep is just the beginning; the CLS (closed-loop system) platform can open

additional markets with greater revenue potential for Victhom.• Significant technical improvements in the POWER KNEE 2 have positioned the product

to address greater market size.• Substantial intellectual property portfolio with 50 granted and 75 pending patents.• Dependence on external capital for at least the next two years.• Market conditions and stock price may be key deciding factors in proceeding with new

products.

eResearch Victhom Human Bionics Inc.

2 July 3, 2008

CONTENTSUPFRONT 1RECOMMENDATION 1PROFILE 1HIGHLIGHTS 1THE COMPANY 3OPERATIONS 4PRODUCTS 4MANAGEMENT AND DIRECTORS 7RISKS 8FINANCIAL REVIEW AND OUTLOOK 9VALUATION 12CONCLUSION 13

Victhom Human Bionics4780 rue Saint-Félix, suite 105Saint-Augustin-de-Desmaures

Quebec G3A 2J9Canada

Tel: 418-872-5665

Toll Free: 1-888-840-5665Fax: 418-872-5116

www.victhom.com

Victhom Human Bionics Inc. Update Report

3July 3, 2008

THE COMPANY

Incorporated in January 2002 as Begama Technologies, the Company changed its name to Victhom Human Bionics in November of the same year. Founded by its current Co-Chief Operating Officer Stéphane Bédard, Victhom is located in Saint-Augustin-de-Desmaures, near Quebec City. The Company employs a staff of 60 in research and development and 10 in administrative roles.

As a medical device company, Victhom focuses on the research, development and commercialization of bionic devices that target physical dysfunctions caused by limb amputation, and disorders such as foot drop, sleep apnea and chronic pain. Areas of specialty include the Orthotics and Prosthetics (O&P) and neuromodulation markets. Victhom has a portfolio of 50 granted and 75 pending patents in various countries worldwide.

HISTORY

TABLE 1: COMPANy TIMELINE

Nov-2002 Established as Victhom Human Bionics.Apr-2004 Listed on TSX under symbol VHB.Jul-2004 Acquires Neurostream Technologies for $7.1M.

Oct-2004 Strategic partner Ossur assumes responsibility for the commercial launch of the Bionic Leg and announces pre-marketing trials.

Jan-2005 Receives first order for 50 bionic legs from partner Ossur.Mar-2005 Completes $18.4M financing via private placement of convertible debentures.Sep-2005 Announces collaborative agreement for development of Orthotics and Prosthetics

products with Ossur over a period of 3 to 6 years. Ossur to fund development costs totalling $18M.

Nov-2005 POWER KNEE (Bionic Leg) wins Popular Science award for 2005 Best of What's New.

Jul-2006 Meets with Medical Devices Bureau of Health Canada to discuss clinical development program for testing involving human subjects for Neurostep.

Sep-2006 Worldwide launch of POWER KNEE by Ossur.Oct-2006 Announces pilot animal studies on medical indications of Bionized CLS

neuromodulator.Nov-2006 Receives authorization from Health Canada to conduct investigational testing of

Neurostep. Met with U.S. Food and Drug Administration to discuss clinical development of Neurostep.

Mar-2007 Completes $12.4M financing through secondary offering at $0.35 per unit.Oct-2007 Announces the receipt of "no objection" letter from the regulatory body in the U.K.

to commence clinical investigation of the Neurostep.Dec-2007 Announces approval from the Canadian health authorities to commence clinical

investigation of the Neurostep in Quebec City.Jan-2008 Announces approval from Max Healthcare Institute Ethics Committee to commence

clinical investigation of the Neurostep in India.Apr-2008 President and CEO Benoit Huet departs Victhom. Normand Rivard assumes

responsibility of acting President.Apr-2008 Announces positive initial results of CLS technology in ongoing human trials.Jun-2008 Announces plans to commercialize the Neurostep in 2009.

Source: Company reports

eResearch Victhom Human Bionics Inc.

4 July 3, 2008

In April 2002, the Company was listed on the TSX Venture Exchange, under the symbol VHB, initially as a capital pool company. In April 2004, Victhom started trading on the TSX under the symbol VHB.

COMMENT: Midsummer Investment announced the acquisition of 2.1 million shares of Victhom in January 2008, bringing its total ownership of Victhom shares to 11.4 million or 11.91% of total shares outstanding.

OPERATIONS

Victhom is comprised of two business units: Biotronix and Neurobionix.

1. Biotronix

The Biotronix business unit addresses the O&P market through the development of product candidates to support or replace peripheral limbs. With 17 issued and 30 pending patents to its credit, Biotronix develops highly sophisticated, motorized and interactive O&P products utilizing sensors and artificial intelligence. These products provide greater flexibility and possibilities for individuals living with the loss of a lower limb, such as covering greater distances and climbing stairs. Victhom partnered with Ossur, an Icelandic company, in October 2004 for the development of the Bionic Leg, which became commercially available as the POWER KNEE in September 2006. The group’s current development activities are focusing on the next generation of the POWER KNEE.

2. Neurobionix

The Neurobionix business unit is making advances in the highly attractive neuromodulation field through the development of platforms such as the Bionized CLS Neuromodulator. The unit has 20 issued and 52 pending patents. While numerous neurostimulation products and technologies are widely available, the Bionized CLS Neuromodulator is a pioneer. It is a completely implantable device with the ability to measure (sense) and stimulate the peripheral nervous system to treat physiological dysfunctions caused by stroke or multiple sclerosis. This technology can be applied in the treatment of gait disorders (e.g. foot drop), obesity, sleep apnea and chronic pain. The first product built on this platform is the Neurostep, currently undergoing clinical trials. Neurostep is a completely implantable device used to treat gait disorders.

PRODUCTS

Victhom is currently focusing on two products: Neurostep and POWER KNEE 2.

1. NEUROSTEP

Developed on the Bionized CLS Neuromodulator platform, the Neurostep is a completely implantable device used for the treatment of foot drop, a condition resulting from stroke. The condition causes the patient to slap the foot on the floor. Because the Neurostep has no external attachments, the patient has greater freedom to perform activities such as swimming or sleeping. The procedure for implanting the Neurostep is low-risk and much less complicated than, for instance, a Pacemaker implant.

Victhom Human Bionics Inc. Update Report

5July 3, 2008

The Neurostep is in multi-centre clinical trials in Canada, the U.K. and India. The trials, which are expected to be completed in 2008, are being conducted using prototype models. Preliminary results have been positive. The Company wants to assess a larger sample of patients and data in preparation for public disclosure. As the prototype units do not meet commercialization standards, the Company is aiming to complete the commercial design of the Neurostep by the end of 2008, which includes longer battery life. The year 2009 will be a critical period for the Neurostep, as the Company moves to finalize the commercial proof-of-concept of the product and file with the European regulatory body for distribution. Victhom is targeting production of 100 commercial units of the Neurostep for the first half of 2009.

COMMENT: We are expecting the Neurostep to start generating revenues in Europe in 2010. The product is already attracting attention at industry conferences. In our view, finding a commercialization partner for the Neurostep will not be a challenge should the Company decide to proceed in that direction. A move towards commercialization will be a strong catalyst for Victhom’s shares, as it will validate the technology and products.

If the Company can raise capital at favourable terms, then FDA trials may be considered next year. Generally, the approval process in the U.S. is long and expensive. We believe the Neurostep may be commercially available in the U.S. in 2011.

2. POWER KNEE 2

The POWER KNEE is a revolutionary product in the lower-limb prosthesis market and, as mentioned earlier, has been recognized by Popular Science magazine as the recipient of the 2005 “Best of What’s New” award. It is the world’s first motorized prosthesis for above-the-knee amputations. The product supports patient weight of up to 220 pounds. Weighing about 16 pounds, the POWER KNEE is battery-powered for self-propulsion, allowing the patient to cover greater distances with ease. The sensors located on the prosthesis communicate with the sensors on the sound leg via Bluetooth technology. Using artificial intelligence, the POWER KNEE calculates gait patterns and angular measurements at 1,350 times per second, enabling the prosthesis to determine the next step. Transfemoral (above-the-knee) amputees expend 80% more energy than individuals with two sound legs. The POWER KNEE vastly improves the patient’s ability to climb stairs and walk over uneven terrain, while reducing fatigue due to self-propulsion.

FIGURE 1: NEUROSTEP

Source: Company reports

eResearch Victhom Human Bionics Inc.

6 July 3, 2008

The POWER KNEE became commercially available in September 2006 through Victhom’s O&P partner Ossur. The product retails for about $100,000 including the device, training, rehabilitation and fitting. Due to the cost of the device, use is limited to military personnel living with the loss of a lower limb. Much less sophisticated competing products retail for $20,000-$40,000.

Victhom is working with Ossur in the development of the next generation of the POWER KNEE, which will feature reduced product weight of about eight pounds, longer battery life, quieter operation, and - most importantly - a lower price tag. Victhom and Ossur aim to make the POWER KNEE far more competitive by trimming the price by half. Further impetus for greater market adoption will be provided by reimbursement by public and private insurers.

Product specifications for the POWER KNEE 2 should be available in September 2008. Technical improvements include a complete re-design of the Artificial Intelligence (AI) integration and the elimination of the need for equipment on the sound leg. All sensors and equipment will be located on the prosthesis. This will increase the target market size and provide greater ease of movement with less training.

FIGURE 2: POWER KNEE

Source: Company reports

Victhom Human Bionics Inc. Update Report

7July 3, 2008

MANAGEMENT AND DIRECTORS

1. Company Officers

The current management team is comprised of:

Normand Rivard - Acting President and Chief Financial OfficerNormand Rivard brings past experience in a financial capacity in the medical field, as well as expertise in business acquisitions and financing.

Stéphane Bédard - Founder and Chief Operating Officer, BiotronixStéphane Bédard is credited as the inventor of the bionic leg (POWER KNEE). He brings considerable experience in human anatomy, physiology, and biochemistry.

Nader Kameli - Chief Operating Officer, NeurobionixNader Kameli has over 25 years’ experience in safety-critical product development. He has previously served as Group Manager of Business Development for Boston Scientific/Guidant. In addition, Mr. Kameli has extensive experience with intellectual property licensing.

Lana Fiset - Vice President, Legal Affairs, Human Resources, and Secretary GeneralLana Fiset brings 10 years’ experience in a legal capacity in the financial services industry. In addition, she has held positions as legal counsel for life sciences and pharmaceutical companies.

COMMENT: The Company is assessing the performance of the current management team. Finding a permanent CEO has dropped on the priority list as the focus remains on the commercialization of the Neurostep. Commercialization experience will be a key selection criterion for the new CEO.

2. Board of Directors

Daniel Johnson, LL.M., MBA, Ph.D. - Chairman of the Board (Counsel at McCarthy TétraultLLP)Normand Rivard (Acting President and CFO, Victhom Human Bionics)Stéphane Bédard (Founder and COO, Victhom Human Bionics)Jeffrey Hill, Ph.D. (President, Healthcare Business Associates)Nitin Kaushal, CA (Head of Investment Banking, Desjardins Securities)Hans Mader (CEO, HJM & Associates)Martin LeBlanc (CEO, Caprion Proteomics)Nader Kameli (COO, Victhom Human Bionics)

eResearch Victhom Human Bionics Inc.

8 July 3, 2008

RISKS

The following risk factors could materially impact Victhom’s commercialization and revenue-generation abilities.

Uncertainty Associated With Time to MarketAt its current stage, Victhom is a research and development company. The products and technologies being developed need to endure extensive testing, data collection, and regulatory approvals. As a result, the time to market for Victhom’s products and technologies cannot be pre-determined with certainty.

Ability to Secure Funding and Raise CapitalVicthom requires access to funding - by way of grants, development reimbursements and additional capital - in order for its key products and technologies to reach commercialization and market acceptance. The Company has generated losses to date and may continue to do so in the future; therefore, continuous funding is required to keep the Company solvent.

Regulatory ApprovalsPrior to reaching commercialization, Victhom’s products and technologies need to secure regulatory approvals from the relevant authorities in the target markets. The approvals may be delayed, or may not materialize.

Intellectual Property Patent InfringementVicthom may have to defend itself against patent infringement claims by competing companies. Alternatively, Victhom may have to successfully pursue competitors infringing on its intellectual property. In either circumstance, the legal process may be lengthy, costly, and uncertain.

Securing and Depending on PartnershipsFor its Neurobionix business, Victhom may seek to secure a collaborative development and marketing partnership. The partnership may not be on favourable terms to the Company, or may not materialize at all. In addition, the Company would be dependent on its partner’s ability to successfully launch and market its new and existing products.

Competition and Technological ChangeThe neurostimulation business is highly competitive with rapid technological advancements. Victhom’s products may not retain their technological advantage due to shorter development timeframes, lower costs, and greater market acceptance of competing products.

Litigation and Product LiabilityMedical device developers face lawsuits and litigation risk arising from product liability. An adverse decision could force product design changes or discontinuation of the product platform. Liability insurance may be difficult and costly to secure.

Dependence on Key Technical StaffVicthom is dependent on its key technical staff for research and development activities. Departure of key technical personnel may slow the research and development activities of the Company. Additionally, unless subject to a non-compete clause, the departing employees may take to competitors the knowledge and trade secrets gained at Victhom.

Victhom Human Bionics Inc. Update Report

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FINANCIAL REVIEW AND OUTLOOK

Victhom’s fiscal year-end is December 31.

1. Revenues

(a) POWER KNEE: We expect revenues of $3.0 million for 2008 compared with $2.2 million for 2007. The revenues consist of reimbursements from Ossur for the POWER KNEE, which will total approximately $18 million through 2012. We estimate that the POWER KNEE 2 will be commercially available in 2009 and retail for about $50,000 including device, fitting and rehabilitation. We assume that Victhom will receive 6%, or $3,000 royalty per unit. We are projecting sales of 1,000 and 1,500 units in 2011 and 2012, respectively, and corresponding royalties of $3 million and $4.5 million. Product sales should peak at approximately 4,000 units per year, generating royalties of $12 million annually.

(b) Neurostep: We believe that the Neurostep will launch commercially in Europe and the U.S. in 2010 and 2011, respectively. We estimate the market size for the Neurostep at $5 billion, based on a 12% addressable pool out of 2.8 million first-year and second-year stroke patients. The product is expected to retail for about $15,000 and should generate revenues of $10.1 million, $30.2 million and $50.4 million in 2010, 2011 and 2012, respectively. Success with the Neurostep will lead to revenue ramp-up (+178% year-over-year) in 2011. We believe that the Bionized CLS Neuromodulation is the key to unlocking Victhom’s value. Other indications such as sleep apnea, obesity and chronic pain will open further opportunities for Victhom beyond our four-year forecast horizon.

TABLE 2: REVENUE FORECAST

Assumptions for POWER KNEE 2:Selling price per unit $50,000Percent to manufacturer (Ossur) 60%Percent royalties to Victhom 10%

Assumptions for Neurostep:First and second-year stroke patients in US & Europe 2,800,000 Percent addressable foot drop patients 12%Target patient base 336,000 Selling price per unit $15,000Estimated market size

(in 000s) 2007 2008 2009 2010 2011 2012POWER KNEE 2 $2,200 $3,000 $2,800 $2,800 $5,600 $5,900

Reimbursements $2,200 $3,000 $2,800 $2,800 $2,600 $1,400Units sold - - 100 500 1,000 1,500Royalties $0 $0 $0 $0 $3,000 $4,500

Neurostep $0 $0 $0 $10,080 $30,240 $50,400Penetration rate - - 0.0% 0.2% 0.6% 1.0%

Total revenue $2,200 $3,000 $2,800 $12,880 $35,840 $56,300

EBITDA -$8,462 -$9,442 -$12,874 -$4,801 $12,821 $24,012EBITDA Margin - - - - 36% 43%

Source: eResearch

$5,040,000,000

eResearch Victhom Human Bionics Inc.

10 July 3, 2008

2. Costs

We expect the average monthly burn rate to peak at $1.3 million in 2009 as the Company moves towards the commercialization of the Neurostep in Europe, and continues the approval process in the U.S. We believe the Company will incur an additional $5.5 million in clinical costs for FDA approval for the Neurostep from 2008 to 2010.

FIGURE 3: MONTHLy BURN RATE (000s)

Source: eResearch

$667 $738

$942 $912 $1,067

$1,329

$1,094

2004 2005 2006 2007 2008 2009 2010

3. Financing

Victhom’s cash position at the end of Q1/08 was a healthy $10.4 million. Market conditions permitting, we believe the Company may do another round of financing to raise $7.0 million in 2008.

COMMENT: We believe a rise in stock price to $0.30 per share might prompt the Company to raise capital. Additional capital can be applied towards R&D activities for other indications of the CLS Neuromodulator or securing FDA approval to commence clinical trials for the Neurostep in the U.S.

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TABLE 3: SELECTED FINANCIAL INFORMATION (000s, except per share)

Three Months Ending March 31: Year Ending December 31:2007 2008 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E

Statement of Income/(Loss):Revenue $560 $574 $1,311 $4,207 $3,200 $2,272 $3,000 $2,800 $12,880 $35,840 $56,300Less: Cost of Sales $0 $0 $0 ($1,606) ($444) $0 $0 $0 ($4,536) ($13,608) ($22,680)Less: Research & Development ($1,984) ($2,276) ($6,545) ($6,238) ($8,414) ($8,514) ($10,439) ($13,961) ($12,500) ($8,000) ($8,000)Add: Tax Credits & Grants $311 $341 $1,140 $1,184 $1,167 $1,031 $1,357 $1,815 $1,625 $1,040 $1,040Less: General & Administrative ($390) ($680) ($2,221) ($2,021) ($1,924) ($1,460) ($1,490) ($1,564) ($1,689) ($1,824) ($1,970)EBITDA ($1,503) ($2,041) ($6,315) ($4,474) ($6,415) ($6,671) ($7,572) ($10,910) ($4,220) $13,448 $24,690Less: Stock-based Compensation ($60) ($45) ($594) ($1,141) ($567) ($325) ($358) ($394) ($433) ($476) ($524)Less: Amortization ($184) ($166) ($443) ($814) ($1,031) ($767) ($600) ($493) ($995) ($1,371) ($1,653)EBIT ($1,747) ($2,251) ($7,351) ($6,430) ($8,013) ($7,764) ($8,530) ($11,797) ($5,648) $11,600 $22,512Less: Financial Expenses ($507) ($517) ($374) ($1,780) ($2,133) ($1,998) ($2,234) ($2,234) $0 $0 $0Less: Income Tax $0 $0 $0 $0 $0 $0 $0 $0 ($565) $1,160 $3,377Net Income (Loss) ($2,254) ($2,768) ($7,726) ($8,210) ($10,146) ($9,762) ($10,764) ($14,031) ($6,213) $12,760 $25,889

Total Shares Outstanding 51,398 95,892 49,851 50,386 52,592 95,892 119,226 152,226 168,040 168,040 168,040Weighted Average Shares Outstanding 50,409 88,061 43,755 50,217 50,902 82,046 111,226 150,226 166,040 168,040 168,040Earnings (Loss) Per Share ($0.04) ($0.03) ($0.18) ($0.16) ($0.20) ($0.12) ($0.10) ($0.09) ($0.04) $0.08 $0.15

Statement of Cash Flow:Net Income (Loss) ($2,254) ($2,768) ($7,726) ($8,210) ($10,146) ($9,762) ($10,764) ($14,031) ($6,213) $12,760 $25,889Non-Cash Items:

Stock-based Compensation $60 $45 $594 $1,141 $567 $325 $358 $394 $433 $476 $524Interest on Conv. Debentures $587 $645 $68 $562 $2,099 $2,483 $2,234 $2,234 $0 $0 $0Amortization $184 $166 $443 $814 $1,031 $767 $600 $493 $995 $1,371 $1,653

Changes in Working Capital $1,374 $41 ($574) ($354) ($941) $1,971 ($1,356) ($988) ($333) ($1,191) ($4,528)Cash Flows from Operations ($49) ($1,872) ($7,196) ($6,047) ($7,390) ($4,215) ($8,927) ($11,898) ($5,118) $13,416 $23,538

Property, Plant, & Equipment ($54) ($47) ($1,182) ($1,212) ($834) ($171) ($171) ($2,500) ($2,500) ($2,500) ($2,500)Intangible Assets ($59) ($57) ($295) ($302) ($467) ($376) ($376) ($376) ($376) ($376) ($376)Investments & Acquisitions $0 $0 ($2,865) ($9,558) $13,636 $0 $0 $0 $0 $0 $0Cash Flows from Investing ($114) ($104) ($4,343) ($11,071) $12,335 ($546) ($546) ($2,876) ($2,876) ($2,876) ($2,876)

Demand Loan ($820) $0 $0 $0 $820 ($820) $0 $0 $0 $0 $0Long-term Debt $0 $0 $97 $0 $0 $0 $0 $0 $0 $0 $0Repayment of Long-Term Debt ($8) ($5) ($270) ($1,366) ($35) ($31) $0 $0 $0 $0 $0Deferred Financing Costs $0 $0 ($13) ($1,307) $0 $0 $0 $0 $0 $0 $0Issue of Convertible Debentures $0 $0 $0 $18,354 $0 $0 $0 $0 $0 $0 $0Repayment of Convertible Debentures $0 $0 $0 ($825) $0 $0 $0 $0 ($14,890) $0 $0Issue of Shares & Warrants $11,525 $0 $12,515 $167 $25 $11,556 $7,000 $16,500 $18,000 $0 $0Cash Flows from Financing $10,696 ($5) $12,329 $15,022 $810 $10,705 $7,000 $16,500 $3,110 $0 $0

Net Change in Cash $10,534 ($1,981) $791 ($2,096) $5,755 $5,944 ($2,474) $1,726 ($4,884) $10,541 $20,662Cash, Beginning of the Period $6,499 $12,442 $2,049 $2,840 $744 $6,499 $12,442 $9,969 $11,695 $6,811 $17,352Cash, End of the Period $17,033 $10,461 $2,840 $744 $6,499 $12,442 $9,969 $11,695 $6,811 $17,352 $38,014

As at March 31: As at December 31:2007 2008 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E

Balance Sheet:

AssetsCash $17,033 $10,461 $2,840 $744 $6,499 $12,442 $9,969 $11,695 $6,811 $17,352 $38,014Short-term Investments $0 $0 $4,010 $13,626 $0 $0 $0 $0 $0 $0 $0Accounts Receivable $1,614 $1,454 $2,004 $1,689 $2,985 $1,294 $2,714 $3,630 $3,250 $2,080 $2,080Inventories $0 $0 $258 $372 $0 $0 $0 $140 $644 $1,792 $2,815Prepaid Expenses $161 $149 $84 $162 $230 $175 $175 $175 $175 $175 $175Notes Receivable $0 $0 $69 $0 $0 $0 $0 $0 $0 $0 $0Property, Plant, & Equipment $2,812 $2,301 $2,177 $2,795 $2,924 $2,401 $1,972 $3,979 $5,484 $6,613 $7,460Intangible Assets $9,439 $9,740 $8,630 $8,931 $9,398 $9,701 $10,077 $10,452 $10,828 $11,204 $11,579Deferred Financing Costs $0 $0 $8 $1,353 $1,028 $0 $0 $0 $0 $0 $0

$31,061 $24,105 $20,081 $29,672 $23,064 $26,013 $24,906 $30,071 $27,192 $39,215 $62,123

LiabilitiesAccounts Payable $1,199 $1,659 $1,189 $1,201 $1,264 $1,294 $1,359 $1,426 $1,498 $1,573 $1,651Deferred Revenues $0 $4 $501 $0 $0 $195 $195 $195 $195 $195 $195Demand Loan $0 $0 $0 $0 $820 $0 $0 $0 $0 $0 $0Instalments on Long-term Debt $27 $9 $1,262 $35 $30 $12 $0 $0 $0 $0 $0Instalments on Conv. Debenture $321 $325 $919 $0 $0 $0 $0 $0 $0 $0 $0Deferred Tax Credits $0 $0 $36 $0 $0 $0 $0 $0 $0 $0 $0Long-term Debt $9 $0 $185 $44 $15 $1 $0 $0 $0 $0 $0Convertible Debentures (Liability) $13,976 $15,210 $0 $14,070 $14,866 $14,890 $14,890 $14,890 $0 $0 $0

$15,532 $17,208 $4,092 $15,350 $16,994 $16,393 $16,444 $16,512 $1,693 $1,768 $1,846

Shareholders' Equity $15,529 $6,897 $15,989 $14,321 $6,070 $9,621 $8,462 $13,559 $25,499 $37,447 $60,277$31,061 $24,105 $20,081 $29,672 $23,064 $26,013 $24,906 $30,071 $27,192 $39,215 $62,123

Book Value Per Share $0.30 $0.07 $0.32 $0.28 $0.12 $0.10 $0.07 $0.09 $0.15 $0.22 $0.36

Source: Company Reports & eResearch

COMMENT: In 2007, G&A expenses dropped as a result of restructuring and the cash position benefited from changes in working capital. We expect R&D expenses to spike in 2009 as the Company moves towards commercialization of the Neurostep.

eResearch Victhom Human Bionics Inc.

12 July 3, 2008

VALUATION

We employed two methodologies for calculating the intrinsic value of Victhom: (i) discounted cash flow analysis (DCF), and (ii) sales multiple analysis.

Our DCF analysis, using a 25% discount rate and a 5.5x terminal multiple, yielded $0.51 per share. The discount rate of 25% reflects the inherent risk in successfully commercializing the Neurostep and achieving the target penetration rates. Our DCF model is based on a four-year horizon to 2012, the second year of positive cash flows.

In our sales multiple analysis, applying a sales multiple of 2.2x to discounted 2012 revenues returned a value of $0.38 per share. We note that U.S. comparables are typically valued between 4.0x and 5.0x 2012 sales.

Our sensitivity analysis considers varying discount rates and 2012 price-to-sales (“P/S”) multiples. The share value is more sensitive to P/S multiple expansion than to changes in discount rates.

TABLE 4: DCF VALUATION

Discount rate 25%Terminal multiple 5.5x

2009E 2010E 2011E 2012ECash Flows (000s) ($11,898) ($5,118) $13,416 $23,538Period 1 2 3Discount factor 0.8000 0.6400 0.5120PV of Cash flow / shr -$0.08 -$0.03 $0.08 $0.14PV of terminal value / shr $0.39Sum of PV / shr $0.51

Sales Multiple 2.2x2012E sales (000s) $56,3002012E sales / shr $0.34Discounted sales / shr $0.17

Source: eResearch

TABLE 5: SENSITIVITy ANALySIS

Discount rate 2.2x 3.0x 4.0x 5.0x25% $0.38 $0.51 $0.69 $0.8630% $0.34 $0.46 $0.61 $0.7635% $0.30 $0.41 $0.54 $0.68

Source: eResearch

2012 Revenue multiple

Victhom Human Bionics Inc. Update Report

13July 3, 2008

CONCLUSION

We believe that the Neurostep trials are progressing and the Company is on track to commercialize the product in 2009. The Neurostep holds enormous promise and is the key to unlocking Victhom’s value. Secondly, the POWER KNEE 2 is attracting increased market attention. The product’s re-design and improved performance could potentially increase market size. As a result, we are raising our one-year Target Price to $0.40 from $0.30. The $0.40 target is based on the combination of the DCF and sales multiple analyses. We are introducing our four-year Target Price of $1.50 based on 4.5x 2012 sales - we expect the multiple to expand as the Company continues to mature and products take hold.

We continue to rate the shares as a Speculative Buy, suitable for risk-tolerant investors willing to take a longer-term view.

eResearch Victhom Human Bionics Inc.

14 July 3, 2008

NOTES

Victhom Human Bionics Inc. Update Report

15July 3, 2008

ANALyST CERTIFICATION

Each Research Analyst who was involved in the preparation of this Research Report hereby certifies that: (1) the views, opinions, and recommendations expressed in this Research Report reflect accurately the Research Analyst’s personal views concerning any and all securities and issuers that are discussed herein and are the subject matter of this Research Report; and (2) the fees, earnings, or compensation, in any form, payable to the Research Analyst, is not and will not, directly or indirectly, be related to the specific views, opinions, and recommendations expressed by the Research Analyst in this Research Report.

eResearch analysts on this report: Asim Bukhtiar, B.Sc.(Chem. Eng.), MBA, CFA: Asim Bukhtiar has over 10 years of business consulting and research analysis experience. Previously, he was Associate Equity Analyst with Raymond James covering the software and IT services sector. At CIBC, he worked in a business consulting role providing process re-engineering and project leadership expertise. At FMC, he was responsible for the development of institutional trading and portfolio modeling systems for global money management firms.

Bob Weir, B.Sc., B. Comm, CFA. Bob Weir has 40 years of investment research and analytical experience in both the equity and fixed-income sectors, and in the commercial real estate industry. He was at Dominion Bond Rating Service (DBRS) from 1994 to 2001, latterly as Executive Vice-President responsible for conducting the day-to-day management affairs of the company. He joined eResearch in 2004.

eResearch Analyst GroupDirector of Research: Bob Weir, B.Sc., B. Comm, CFA

Financial ServicesRobin Cornwell

Biotechnology/Health CareScott DavidsonMarita Hobman

Transportation & Environmental Services/Industrial ProductsBill Campbell

Oil & GasEugene BukoveczkyAchille DesmaraisDick Fraser Ross Deep

Mining & MetalsGeorge CargillEric EngNigel HeathAdrian ManlagnitKirsten MarionOliver SchatzHaris SiddiqiAmy StephensonGraham WilsonMichael Wood

Special SituationsAsim BukhtiarBill CampbellBob LeshchyshenRoss DeepNigel HeathAmy Stephenson

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eResearch Recommendation SystemStrong Buy: Expected total return within the next 12 months is at least 40%.

Buy: Expected total return within the next 12 months is between 10% and 40%.

Speculative Buy: Expected total return within the next 12 months is substantial, but Risk is High (see below).

Hold: Expected total return within the next 12 months is between 0% and 10%.

Sell: Expected total return within the next 12 months is negative.

eResearch Risk Rating System A company may have some, but not necessarily all, of the following characteristics of a specific risk rating to qualify for that rating:

High Risk: Financial - Little or no revenue and earnings, limited financial history, weak balance sheet, negative free cash flows, poor working capital solvency, no dividends.

Operational - Weak competitive market position, early stage of development, unproven operating plan, high cost structure, industry consolidating, business model/technology unproven or out-of-date.

Medium Risk: Financial - Several years of revenue and positive earnings, balance sheet in line with industry average, positive free cash flow, adequate working capital solvency, may or may not pay a dividend.

Operational - Competitive market position and cost structure, industry stable, business model/technology is well established and consistent with current state of industry

Low Risk: Financial - Strong revenue growth and earnings over several years, stronger than average balance sheet, strong positive free cash flows, above average working capital solvency, company may pay (and stock may yield) substantial dividends or company may actively buy back stock.

Operational - Dominant player in its market, below average cost structure, company may be a consolidator, company may have a leading market/technology position.